The most prominent example of a price floor in industrialized market economies is a minimum (or award) wage. Demonstrate how a minimum wage is likely to affect the total number of workers employed and the unemployment rate. Are all workers made better off by an increase in the minimum wage? Explain. What is the key determinant of the magnitude of the cost of an increase in the minimum wage? What Australian legislation provides a safety net of minimum entitlements for employees?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter20: Unemployment
Section20.3: Minimum-wage Laws
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The most prominent example of a price floor in industrialized market economies is a minimum (or award) wage.

  1. Demonstrate how a minimum wage is likely to affect the total number of workers employed and the unemployment rate.
  2. Are all workers made better off by an increase in the minimum wage? Explain.
  3. What is the key determinant of the magnitude of the cost of an increase in the minimum wage?
  4. What Australian legislation provides a safety net of minimum entitlements for employees?
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